My friends over at Archer Investment Management in Raleigh, NC have sent me some amazing information to share with you ~ now that you are going to be saying “I do” soon! When starting your life and retirement life together as a couple, these points will make you think~

Engaged or Just Married? Ok, Now What To Do About Money?

Couples often ask us what is the best way to handle finances together. The answer is always the same – whatever keeps your relationship happy. However, it is important for couples to talk about their financial situation and to be transparent with each other’s wishes. During this conversation, talk about your future goals and hopes for your life. These conversations should continue throughout the relationship and will evolve as life changes. Co-managing finances is not just combining checking accounts and paying bills. We recommend spending time together addressing the following items:

BUDGET

Financial success hinges on cash flow. It is critical to understand how much the household is spending on a monthly and annual basis. Make a budget and stick to it.

SAVINGS

Discuss each person’s savings goals and expectation of spending. Figure out how much may be needed for an emergency fund. Some couples realize that one person’s comfort level for emergency savings is drastically different than the other. If there is already plenty of cash available for an emergency fund, what will you do with the excess? Will you open a joint account for investing those funds and can you contribute to that on a monthly basis?

DEBT

Being upfront about any significant debt is important to both the relationship in general and the financial success of the household. Debt can cause problems in many ways, so it is best to have open communication about that issue immediately.

INCOME & CORPORATE BENEFITS

Typically, households do not have both parties making the exact same amount of money. Share income and future income potential with each other and be open if there are issues with a big discrepancy. Also, take time to review your company benefits together and see what each other’s options are for retirement saving and health insurance. If one person does not have a company sponsored retirement plan and the other does, engage in a conversation on how to maximize retirement savings utilizing one plan or using other vehicles such as an IRA. This is a good time to also review any necessary beneficiary designations and make sure they are updated.

LIFE INSURANCE

Young, healthy couples have the benefit of obtaining insurance at a lower cost than older couples. Consider income replacement needs and any outstanding debt when you are factoring in how much life insurance to purchase and what type of insurance.

WILLS & POWERS OF ATTORNEY

While never a pleasant topic, it is important to discuss your plans for your estate after you pass away. This is a critical step to take in situations where couples have children and/or are in second marriages. Finally, find out your state’s requirements for both financial and health care powers of attorney and have those documents drafted as well.

FIGURE OUT THE TEAM

Finally, determine who will be handling the household finances or divide up the responsibilities. Make sure both parties are always engaged in the decisions and understand the household finances. Relationships thrive on trust and transparency, especially with regard to money. Starting off on the right foot will make a huge difference in your relationship over time. A financial advisor can go through all of this with you and help you to make great financial decisions along the way. Consider hiring one to work with you through this process. Sometimes we can see the picture more clearly as outside looking in and can facilitate some of the difficult conversations. At the end of the day, the healthiest relationships in regards to finances are ones that have open, honest communication.

Securities and Advisory Services offered through Triad Advisors Member FINRA/SIPC